Motilal Oswal Mutual Fund (MOMF) has introduced four new index funds aimed at investors seeking growth in mid-cap and small-cap sectors. The new funds include Motilal Oswal Nifty MidSmall Healthcare Index Fund, Motilal Oswal Nifty MidSmall IT and Telecom Index Fund, Motilal Oswal Nifty MidSmall India Consumption Index Fund and Motilal Oswal Nifty MidSmall Financial Services Index Fund.

These new fund offerings (NFOs) are now open for subscription from October 29 to November 6. Recent market research by Motilal Oswal Asset Management Company (MOAMC) suggests an upward trend in the market. According to research, mid- and small-cap companies have shown faster growth rates over the past five years compared to large-caps.

Market cap data indicates an upward trajectory: mid-caps saw a 25.7% increase, small-caps grew 28.0%, and large-caps showed a more modest growth rate of the 19.1%.

Index funds designed for investors with higher risk tolerance seek to capitalize on the potential for higher returns in the mid- and small-cap sectors. While these sectors may be more volatile compared to large-cap companies, they offer significant growth opportunities.

The data further shows that the profitability of mid-cap companies has increased by 25.2%, while small-cap companies have seen a growth of 35.4%. In comparison, large-cap companies have only seen growth of 22.1%. Furthermore, the market capitalization of mid-caps has increased by 25.7% and small-caps by 28.0%, while large-caps have seen growth of 19.1% over the same period. .

The new index fund offerings are suitable for investors who want higher returns by investing in mid- and small-cap sectors. While they may be more volatile compared to large caps, they present significant growth opportunities for those willing to navigate market fluctuations.

Key details

The Motilal Oswal Nifty MidSmall Healthcare Index Fund is an open-ended fund that closely tracks the Nifty MidSmall Healthcare Total Return Index. The primary objective of this scheme is to achieve returns that reflect the total returns of the securities within the Nifty MidSmall Healthcare Total Return Index, taking into account any tracking error. This fund is benchmarked against the Nifty MidSmall Healthcare Total Return Index.

Similarly, the Motilal Oswal Nifty MidSmall IT and Telecom Index Fund is an open-ended fund that tracks the Nifty MidSmall IT and Telecom Total Return Index. The investment objective of this scheme is to generate returns that align with the total returns of the securities represented by the Nifty MidSmall IT and Telecom Total Return Index, taking into account any tracking error. This fund is also benchmarked against the Nifty MidSmall IT and Telecom Total Return Index.

The Motilal Oswal Nifty MidSmall India Consumption Index Fund is an open-ended fund designed to mirror the performance of the Nifty MidSmall India Consumption Total Return Index. The primary objective of this scheme is to generate returns that align with the total returns of the securities included in the Nifty MidSmall India Consumer Total Return Index, allowing for a margin of error in tracking. The fund is benchmarked against the Nifty MidSmall India Consumer Total Return Index.

Similarly, the Motilal Oswal Nifty MidSmall Financial Services Index Fund operates in the same manner, aiming to replicate the Nifty MidSmall Financial Services Total Return Index. It aims to generate returns that correspond to the total returns of the securities within the Nifty MidSmall Financial Services Total Return Index, taking into account possible tracking discrepancies. The fund is measured against the Nifty MidSmall Financial Services Total Return Index.

The four NFOs will be managed by Swapnil Mayekar (for the equity component) and Rakesh Shetty (for the debt component).

Prateek Agrawal, MD & CEO, Motilal Oswal Asset Management Company Ltd, said, “The AUM of the Indian MF industry has grown from Rs. 9.16 trillion ($110.63 billion) in 2014, to Rs. 64.97 trillion ($780.70 billion) by July 2024, growing ~6 times in a span of 10 years, showing the potential of the industry. We believe that mid- and small-cap stocks have the potential to perform well in the long term, considering that the market capitalization of mid- and small-cap companies has grown at a faster pace compared to large-cap companies.”

Pratik Oswal, Head of Corporate Passive Funds, Motilal Oswal Asset Management Company Ltd, said, “India benefits from extensive cross-channel utilization to expand the reach of financial services. With 2,100 fintechs currently operational, India is positioned to become one of the largest digital markets, driven by the rapid expansion of mobile and internet. As the economy grows, so does consumer spending, particularly in discretionary sectors, with the healthcare market expected to reach $638 billion and the IT and telecommunications, consumer and services sectors financials will experience significant growth by 2025. While these sectors offer high growth potential, mid- and small-cap investments in these areas carry greater volatility, making them ideal for risk-tolerant investors prepared for fluctuations in the market. market”.